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Unlocking entrepreneurial opportunities in South Africa

It may be Africa’s economic powerhouse, but just beyond South Africa’s urban centres, opportunities to make a decent living rapidly tail off. A new project aims to change this with entrepreneurship and skills training, with a steep learning curve ahead – and not only for participants.

Forbes Africa’s 30 under 30, an annual list of hotshot young entrepreneurs, featured nine South Africans last year. These twenty-somethings made their name from a range of ideas: luxury socks, advertising and beauty treatments – but also recycled schoolbags and impact investing.

The appeal of social business is also evident in less high-flying circles.

“Often young people in impoverished communities by default come up with solutions to the social or environmental ills they experience”, says Carmen Di Rito, chief development officer at LifeCo UnLtd South Africa, which supports and invests in young entrepreneurs.

But for most young people, sustaining a viable business of any kind is a distant dream. The South African economy is a “dual” one, according to the Global Entrepreneurship Monitor (GEM), with a “sophisticated, largely urban formal sector connected to global markets” operating in parallel to the informal economy of the townships and rural areas, where most people live.

Over half of 15 to 24-year-olds nationwide are unemployed. Many do what they can, selling sweets or hairdressing. But those on the edge of economic hubs remain “locked out of opportunities”, says Di Rito, thanks to prohibitive costs of commuting to the city, childcare responsibilities including caring for younger siblings, and a lack of education and skills. Even the promise of technology fails them: mobile phones are widespread but wifi access is rare, and mobile data is among the priciest in Africa.

The project targets 15 to 25-year-olds in eight communities in the Eastern Cape, Western Cape, Gauteng and KwaZulu-Natal provinces, with the first of eight cohorts starting the 30-day course in late March. What makes the project stand out is its unique focus on creative, digital and social enterprise as a means of helping its young participants to become more active agents in addressing societal needs and supporting sustainable growth in South Africa.

Such initiatives aren’t unheard of in these areas but what’s unusual, says Di Rito, is to offer multiple areas of expertise under one roof. The 160 students will take seven modules delivered respectively by partners Business and Arts South Africa (BASA), Livity Africa and LifeCo (a sister organisation of UnLtd).

The creative field is particularly interesting, as a report published in 2017 highlighted that South Africa’s creative and cultural industries could grow faster than non-cultural sectors of the economy.

While the COSY project should accommodate a broad range of business ideas, it isn’t expecting to create 160 new ventures. Rather, says Samia Chasi, programme manager for entrepreneurship and skills at British Council South Africa, the aim is to “empower young people” and prepare them for the next step, whether as employee or entrepreneur.

So while participants learn about business planning, market research, sales and pitching (with a chance to win funding), the curriculum also covers personal development and skills like digital literacy.

Above all, the partners see their role as enabling, rather than providing.

“We are a catalyst, not a crutch,” explains Chasi. “COSY doesn’t see itself as creating job opportunities. We’re equipping young people with tools, not planting something that doesn’t already exist.”

The approach draws on previous experience of all partners in the areas of youth and enterprise development. For example, the British Council has trained COSY facilitators in their Active Citizens methodology, which emphasises community-led development; the curriculum also applies BASA’s asset-based community development methodology, which helps learners identify and use physical, financial, social and human resources around them.

New ways of working

Young people aren’t the only ones learning new things.

Rural and peri-urban settings are an “unfamiliar environment” for British Council South Africa, which works primarily in urban settings, says Chasi. Field research by LifeCo among target communities — a six-month exercise in 2017 — was therefore essential to understand the landscape, test assumptions and hear feedback. Taster events to promote the programme are further opportunities to listen — and have revealed that some lessons will need to be adapted. In Diepsloot township for instance, awareness of entrepreneurship concepts was much lower than expected.

Flexibility is needed for practical aspects too. Most neighbourhoods don't have computer facilities; some locations pinpointed for workshops can’t be used because buildings don't meet health and safety standards. And dealing with suppliers isn’t as straightforward: one caterer didn’t have a bank account or a registered company number, meaning the usual invoicing process wasn’t possible. “This work challenges everything we know”, says Chasi. “We really have to stretch our adaptability to the maximum.”

Efforts to include as many young women as possible — the initial COSY proposal suggested 40% female participants — are also causing a rethink.

“Life is demanding for many young people,” Di Rito says; women in particular “carry major responsibilities… We’ve got to make sure we’re aware of these.” Adjusting class schedules and helping to find childcare are two options the team is considering. Chasi says involving female role models from the community could help encourage applications.

Some potential participants are cautious for other reasons. The field study found that “past experiences of unkept promises” prompted significant “cynicism and distrust”. Di Rito wasn’t surprised: well-intentioned programmes that under-deliver are “prolific” in South Africa, she says. But the conversations underlined that establishing trust will be central: “We’ve got to be clear about our intentions, and we’ve got to deliver what we said we’d deliver.”

Spreading the impact

Efforts to build trust include working with existing networks and local leaders: COSY expects to involve around 100 community leaders and 50 local organisations.

But this outreach isn’t just to win credibility among, or get access to, potential participants — it’s also a core aim of the project. COSY is financed through EU funding that aims to strengthen civil society organisations’ contribution to governance and inclusive development. Within the overall budget (€935,000), 20 grants of €3,000 each are available to support local organisations. The project reach will also be extended by training some graduates to co-facilitate a one-week foundation course for other youths.

Creating a generation of entrepreneurs may be harder than expected. The percentage of 18 to 24-year-old South Africans starting or running early-stage businesses is far below the average for Africa, according to GEM. The proportion of adults who either see opportunities to start a business, or consider themselves capable of doing so, is also below average. A host of factors, from education systems to the business regulatory environment, need to be addressed to shift those numbers significantly. But Chasi is confident that the project will bring value – particularly, she adds, “if we continue to engage communities thoughtfully and collaboratively”.

Some appetite for social entrepreneurship, at least, seems evident. The field research found that the kinds of businesses people wanted to run were mostly forms of social business. There were very little solely profit-driven ambitions, write the authors, and a lot of concern for the wellbeing of those around them. Perhaps one or two will make it onto a future Forbes list.

The British Council is expanding its support for young social and creative entrepreneurs in South Africa through a second programme, launching in March, called Developing Inclusive and Creative Economies. DICE aims to promote sustainable and inclusive development in the UK and five key emerging economies – Brazil, Egypt, Indonesia, Pakistan, South Africa – and will offer grants for UK organisations working with counterparts in each of these countries to co-develop and co-deliver interventions that empower women and girls, foster youth employment and support people with disabilities and other marginalised groups. Find out more here.